The importance of full and frank disclosure within divorce proceedings

by  Wendy Wharton, family law solicitor, Curtis Law

When a couple divorce or have a partnership dissolution they are more than likely to have the financial aspects of their relationship to deal with.

Sometimes separating is not always simple, straightforward or acrimonious. Financial settlement is one of the most contentious aspects of separation and people find it difficult to see why the husband or wife, or civil partner should get anything at all.

The circumstances of each divorce or dissolution of a civil partnership are different and there are no strict rules relating to the resolution of financial matters. The law in this is flexible and it is not always the case that assets will be divided equally between the two parties.

There are a series of factors which are taken into account when attempting to reach an appropriate financial agreement including child support and welfare, length of the marriage, civil partnership and ages of the parties, financial needs, contributions – these are just a few examples.

Before any family lawyer can properly advise a party upon what is a realistic division of assets on divorce or civil dissolution, the full extent of all the assets have to be identified and disclosed in full. Any businesses or homes require valuation and if there are any pensions, these also need to valued.

If one party fails to disclose assets or tries to hide or depreciate assets this can get them into serious trouble. At the moment a Respondent husband has been found guilty of contempt of court and jailed for not co-operating with financial relief proceedings (Ball v Shepstone [2013]) after failing to comply with an order and was committed to prison for 14 days. He has also been ordered to pay his wife’s costs of and incidentals to her application for committal.

Issues also arise relating to what constitutes ‘matrimonial assets’ and what should be subject to the sharing principle. Arguments often arise over whether assets owned before the marriage should be viewed as non-matrimonial and therefore treated differently and often the same issues arise over inherited assets or assets built up during the period of separation.

However all have to be disclosed for a decision to be made. In the cases of ‘Miller v Miller’ and ‘McFarlane v McFarlane’ for example, the House of Lords confirmed that when making a financial award the three principles which should guide the court are needs, compensation and sharing.

There are no hard and fast rules as to how these principles are applied. The assets of the marriage are not divided equally in every divorce, but where certain factors apply there is a strong argument for an equal division. An equal split of assets will usually take place where assets of the marriage are large and therefore sufficient to meet the housing needs of both the husband and the wife, or civil partners and the assets were built up during the course of the marriage or civil partnership.

In a most recent case, which is still before the court, an ex-husband is alleged to have concealed £15,000 of jewellery belonging to his ex-wife, which he claimed ‘she lost’.

The judge has given the husband until 16 December to help find the jewellery and has ruled that after the marriage has broken down irretrievably, the husband had attempted to put money ‘beyond the reach’ of his ex-wife. If the jewellery somehow ‘magically returns’ that is acceptable, if it does not she will get the extra cash from the house sale proceedings on top of her 80% share of the sale of the former family home. Parties need to be very careful when deciding to not disclose assets or put money beyond the reach of their husband or wife or civil partner as this will always be discovered and at additional cost.